Stipend

What is Stipend?

Stipend is paid to people who are not regular employees, interns, articleship trainees, research scholars, and apprentices under the Apprentices Act. The relationship is usually defined as a learning engagement, not employment, so PF, ESI, and gratuity do not apply. Tax treatment depends on the nature of the stipend. If it is for skill-building or to cover living costs while learning (CA articleship, medical residency, fellowship), some courts treat it as a scholarship under Section 10(16) and exempt it. If it is essentially payment for work done, it is taxable as income from other sources or salary, with TDS deducted by the payer if the amount is large. Apprentice stipend under the Apprentices Act has its own rules and minimum rates set by the government.

Example

Intern stipend ₹25,000/month for 6 months = ₹1.5L total. Below basic exemption, no TDS. CA article assistant stipend ₹15,000/month, treated as scholarship under 10(16), tax-free.

How Stipend is used

Pay stipend through a separate non-payroll head if interns are not on the employee roll. Issue Form 16A if TDS is deducted under Section 194C or similar. For apprentices, follow the wage structure under the Apprentices Act.

Stipend FAQs

Is stipend taxable?

Depends. Pure scholarships under Section 10(16) are exempt. Stipend that is really payment for work is taxable.

Does PF apply to stipend?

No, since interns and apprentices under the Apprentices Act are not employees for PF purposes.

Should I file ITR if I only got stipend?

If total income crosses ₹2.5L (old regime) or ₹3L (new regime), file ITR.